'Nomura must push ahead with reforms to restore trust in Japan’s financial markets', Financial Services Minister Tadahiro Matsushita told reporters in Tokyo Friday. 'Employees and executives should all take this order very seriously', he said, without elaborating on the details of the instructions.
Bloomberg reports that the action concludes an investigation started in April that revealed Nomura failed to prevent employees from providing tips to traders on at least three share sales in 2010. Nomura has lost equity and bond underwriting business amid the probe, missing out on coordinating the global $8.5bn initial public offering of Japan Airlines Co. also announced Friday.
'This issue damages Nomura’s reputation significantly, and the penalty ordered today is credit negative', Maki Hanatate, senior credit officer at Moody’s Investors Service in Tokyo, said in a telephone interview. 'We need to examine how it will affect Nomura’s business, including mergers advisory, equity and bond underwriting, and trading'.
Nomura said in a statement:
'In accordance with Article 51 of the Financial Instruments and Exchange Act, Japan’s Financial Services Agency today issued a business improvement order against Nomura Securities Co., Ltd.
'We take this matter very seriously and we apologize to our clients and all other concerned parties for the trouble that has been caused. In relation to matters raised in recommendations issued by the Securities and Exchange Surveillance Commission, we announced a series of improvement measures on June 29, including strengthening the management of corporate-related information, improving our personnel management system, and ensuring business ethics. On July 26, we reported on the progress of implementation of these improvement measures.
'We will continue to further enhance our internal controls and work across the entire firm to prevent similar incidents occurring in the future and to regain the trust of the public'.
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